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Fidelity has cut the value of its holding in Meesho by 33.6% since the original investment, giving the Indian social commerce startup a valuation of $3.5 billion, adjusted for outstanding shares.

The U.S. asset manager valued its holding in Meesho at $27.8 million at December’s end, down from the $41.9 million that it invested in the second half of 2022 through a specific mutual fund unit. Fidelity made the disclosure about the markdown in its monthly disclosure on Monday afternoon.

Fidelity had marked down the valuation of Meesho to $4.1 billion at the end of October. The startup was valued at $4.9 billion in its previous funding. The valuation adjustment follows a secondary sale transaction late last year when early backer Venture Highway sold some of its equity in Meesho to WestBridge Capital, TechCrunch first reported. That sale valued Meesho at $3.5 billion, a factor that may have contributed to Fidelity’s assessment.

In a statement to TechCrunch, a Meesho spokesperson said: “Funds attribute value to their portfolio investments, considering various factors such as the valuation of comparable companies. Based on Fidelity filings, the number of shares held and the current number of total outstanding fully diluted shares, the valuation is assessed at $3.5 billion. The increase in the number of outstanding shares, notably due to the ESOP pool expansion, could have contributed to this valuation shift.”

At the same time, Fidelity has slightly marked up the value of its holding in Reddit, Gupshup and X, according to the monthly disclosure. All of these startups remain far below their original investment dollars.

Meesho — which counts Meta, Peak XV, Prosus Ventures, B Capital, and SoftBank among its backers — operates a social commerce startup and is among the fastest growing e-commerce startups in the country. Its current GMV run rate is over $5 billion, AllianceBernstein reported earlier this month. It’s also looking to expand into new areas — planning to build a financial services platform and scale its grocery delivery business, Indian daily Economic Times reported Tuesday.

Over 50% of Meesho’s sales come from Tier 2 and below cities, allowing it to effectively target a demographic largely overlooked by Flipkart and Amazon so far. Meesho’s strategic prioritization of small towns and focus on mass-market, value-conscious customer base is paying dividends, according to AllianceBernstein.